scholarly journals Impact of Interest Rate Risk on Supply Chain Network under Bank Credit and Trade Credit Financing

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Jie Zhang ◽  
Zhiying Zhang ◽  
Yuehui Liu
Keyword(s):  
Supply Chain ◽  
Variational Inequality ◽  
Interest Rate ◽  
Trade Credit ◽  
Interest Rate Risk ◽  
Supply Chain Network ◽  
Rate Risk ◽  
Financial Flow ◽  
Credit Financing ◽  
The Impact

The purpose of this study is to propose a methodology that reflects the impact of interest rate risk on firms in supply chain network under bank financing and trade credit and further describe how trade credit improves the impact of interest rate risk on supply chain network through a financial flow equilibrium. A mean-variance framework and a network equilibrium analysis are integrated to provide a modeling framework. The model allows for the investigation of how bank credit financing (BCF) and trade credit financing (TCF) affect the payment strategy and financial flow of interconnected firms in supply chain networks and how they are affected by interest rate risks. The optimal behavior of manufacturers and retailers is described through variational inequality. We construct a supply chain network equilibrium model and derive qualitative properties of the solution and the function that becomes assimilated to the variational inequality problem. Additionally, variational inequality is solved using the modified projection method. This study extends the research on the impact of interest rate risk on the decision in supply chain network of firms. While other studies focus on the game between banks and firms, only a few authors have made attempts to examine the game between one manufacturer and one retailer in supply chain. An effective trade credit strategy is obtained by balancing cash and credit transactions. Through the case study, we learn how to balance the capital flow effectively to improve the negative impact of interest rate risk on supply chain.

scholarly journals The Effect of Risks on Banking Safety: Applied Study on Jordanian Traditional Banks (2005-2016)

2017 ◽  
Vol 9 (9) ◽  
pp. 102
Author(s):  
Mohammad Abdel Mohsen Al-Afeef ◽  
Atallah Hassan Al-Ta'ani
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Liquidity Risk ◽  
Interest Rate Risk ◽  
Bank Credit ◽  
Applied Study ◽  
Rate Risk ◽  
The Impact

Banking sector is one of the most important sectors that support the sustainable economic development in Jordan, therefore this study aimed to test the impact of risks; (Liquidity risk, bank credit risk and interest rate risk) on the safety in the banking sector in the Jordanian commercial banks during the period 2005-2016.The results of the study showed that there is a statistically significant impact for each of liquidity risk and interest rate risk on the safety in the banking sector, and there isn't statistically significant impact for credit risk on the safety in the banking sector during the period of this study, and also find that the explanatory of model was 60.5%, which means that 39.5% due to other factors.

scholarly journals The impact of interest rate risk on bank lending

2020 ◽  
Vol 115 ◽  
pp. 105797 ◽  
Author(s):  
Toni Beutler ◽  
Robert Bichsel ◽  
Adrian Bruhin ◽  
Jayson Danton
Keyword(s):  
Interest Rate ◽  
Bank Lending ◽  
Interest Rate Risk ◽  
Rate Risk ◽  
The Impact

scholarly journals The role of voucher sale in advance for a capital-constrained supply chain

2021 ◽  
Author(s):  
Haijun Wang ◽  
Guanmei Liu
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Wholesale Price ◽  
Optimal Choice ◽  
Bank Loan ◽  
Optimal Decision ◽  
Order Quantity ◽  
Credit Financing ◽  
The Impact

This paper studies voucher sale as an operational method to raise working capital for a supply chain, which consists of a supplier and a capital-constrained retailer. The retailer takes advantage of an online platform to sell vouchers and to get access to borrowing from a bank. By formulating a Stackelberg game model, we show the retailer's possible order quantities in the cases without and with bank loan and analyze the impact of voucher sale on the retailer's optimal choice of order quantity and the supplier's optimal wholesale price. We find that a smaller voucher's price induces the retailer to be more likely to order with loan from a bank while a larger voucher's value induces an order quantity with the loan more difficult to be repaid. In addition, if voucher's price is large, the supplier decides a wholesale price which leads the retailer not to borrow from a bank; and if voucher's price is small, the supplier's optimal decision is obtained by anticipating the retailer to borrow from a bank. We also analyze the impact of voucher sale in the presence of trade credit financing on the firms' decisions. The results show that the voucher's price should be small so that the retailer can repay the supplier if voucher's value is large; otherwise, the retailer either does not borrow from the supplier or may not repay the supplier. Besides, the supplier decides a wholesale price so that the retailer does not borrow or can repay the supplier, except that the voucher's value is large and the voucher's price is medium.

scholarly journals Financing Strategy and Carbon Emission Abatement in a Supply Chain considering Retailers’ Competition

2021 ◽  
Vol 2021 ◽  
pp. 1-19
Author(s):  
Man Yu ◽  
Tuo Li ◽  
Zhanwen Shi
Keyword(s):  
Supply Chain ◽  
Interest Rate ◽  
Carbon Emission ◽  
Trade Credit ◽  
Bank Credit ◽  
Emission Abatement ◽  
Dual Channel ◽  
Financing Channels ◽  
Credit Financing ◽  
Financing Strategy

This paper investigates the issues of financing channels (bank credit financing, trade credit financing, and dual-channel financing) and carbon emission abatement in a supply chain consisting of one capital-constrained manufacturer and two capital-constrained retailers. Compared with bank credit, we find that every member can make more profit under trade credit when only one financing channel is available. When both bank credit and trade credit are available, the retailers’ financing strategy highly depends on the interest rates charged by the creditors. In addition, we also examine the impact of financing channels on emission abatement. It shows that the manufacturer reduces more carbon emissions under trade credit. Interestingly, the emission abatement has nothing to do with trade credit interest rate when retailers only adopt trade credit, whereas it is closely related to trade credit interest rate under dual-channel financing.

scholarly journals Assessing influence of factors on interest risk of commercial bank

2021 ◽  
Vol 2021 (1) ◽  
pp. 115-124
Author(s):  
Olga Mikhailovna Markova
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Interest Rates ◽  
Commercial Bank ◽  
Industrial Development ◽  
The United States ◽  
Interest Rate Risk ◽  
Interest Income ◽  
Rate Risk ◽  
The Impact

In modern conditions of the rapid industrial development the banks have to forecast their risks and profitability precisely, to apply information technologies to assess their activities. To evaluate the bank's income, it is necessary to carry out an internal analysis of its assets and liabilities and determine the factors effecting the bank's profitability by managing interest rate risk. The hypothesis of the study is the analysis of the impact on the net interest income and interest rate risk of a commercial bank of factors such as the exchange rate and the key rate of the Bank of Russia (for example, Sberbank, PJSC). There has been studied the impact of the factors (exchange rate and key interest rate of Central Bank of Russia) on the bank's net interest income by using correlation and regression analysis and building a regression model. Many tools are found to be used by the experienced analysts. One of the main tools is GAP analysis of interest rate risk. There have been illustrated the graphs of changes in interest rates of savings and loan associations during the crisis in the United States in the 1950-1960, of realization of interest rate risk with an increase in interest rates, the distribution of assets and liabilities according to the maturity of the balance sheet structure, the impact of changes in the interest rate GAP on net interest income, etc. A matrix of correlations of all variables in the sample (rates of growing values) was constructed. Conclusions are drawn on the need to use hedging instruments (interest rate swaps, interest rate options), as well as of attracting the most reliable data on the state of interest rate risk in the commercial banks.

Nexus Between Interest Rate Risk and Economic Value of Equity of Banks

2021 ◽  
pp. 097215092110394
Author(s):  
Soundariya G. ◽  
Treesa Aleena David ◽  
Suresh G.
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Economic Value ◽  
Impulse Response Function ◽  
Interest Rate Risk ◽  
Vector Error Correction ◽  
Market Risks ◽  
Rate Risk ◽  
The Impact

This analytical study looks to provide recommendations to the banking sector on different policies and regulations by examining certain aspects of the Basel III accord, which was designed to manage specific operational, capital and market risks of banks. A review of extant literature reveals that only a few papers have been written on simulation-based approaches, using basis and re-pricing risks. We look to connect this as a source while attempting to define and measure the impact of interest rate risk (IRR) on the economic value of equity (EVE) of banks. We propose to use the driver—driven method, wherein interest rate shocks are derived through prime lending rate (PLR) for the period of 2016–2019 in the context of India. Monte Carlo Simulation and OLS regression was performed to predict the IRR; Granger causality was used to examine the cause and effect relationship; the impulse response function (IRF) was used for sensitivity analysis; and the vector error correction model (VECM) technique was used for co-integrating relationships. Notably, the EVE movement caused due to shocks in interest rates had to be traced as it envisages probable EVE losses. Importantly, our study is among the first few to show the relationship between IRR and EVE of banks, especially after the deregulation of Indian banking sector.

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